Amendment 87: A graduated income tax would raise taxes on high earners in Colorado

Colorado voters this November will be asked to replace the state’s flat income tax with graduated tax brackets that would raise taxes on people and businesses making more than $500,000, and cut them for everyone else.

The proposal, Amendment 87, would raise an estimated $2 billion a year that the state could spend on healthcare, K-12 education, pre-K and childcare at a time that Colorado’s budget has been facing annual deficits of $1 billion or more.

If approved by voters, it would represent one of the biggest changes to the Taxpayer’s Bill of Rights since it was added to the state constitution in 1992.

Amendment 87 would repeal TABOR’s prohibition on graduated income tax systems, allowing the state to charge higher tax rates the more money someone earns. That would bring Colorado in line with the federal government and most other states, which also use tax rates that rise with higher earnings.

Although constitutional amendments typically require 55% approval to pass in Colorado, Amendment 87 only needs a simple majority. That’s because it doesn’t add new language to the state constitution. Instead, it deletes a constitutional requirement that all income be taxed at the same rate. The new tax brackets proposed by the measure would be added to state law.

Here’s what you should know about Amendment 87 before you vote.

How Amendment 87 would change your income taxes

Today, everyone in Colorado pays the same 4.4% state income tax rate, no matter how much money they make.

Under Amendment 87, individual income and business profits would be taxed at different rates across six brackets.

Taxes would go down to 4.2% or less on the first $100,000 of taxable income. Then, for every dollar earned above $500,000, the tax rate would increase in increments up to a top marginal tax rate of 8.4% for income greater than $2 million.

For a household with $75,000 in taxable income, taxes would go down by $275 a year, while a household with $150,000 in taxable income would get a $325 tax cut. For a family making $550,000, taxes would go up $1,175 a year. Someone making $10 million annually would owe an additional $376,000 in taxes.

The median Colorado family makes $102,000 in household income, but because of deductions, taxable income is typically less than people earn overall.

Amendment 87 won’t affect taxpayer refunds owed under TABOR, according to Colorado Legislative Council Staff.

If Amendment 87 passes, the vast majority of households — upwards of 97% of Colorado’s 3 million taxpayers, according to Colorado Department of Revenue income data — would get a slight tax cut.

That leaves fewer than 100,000 households whose taxes would go up.

That small group makes more money than the combined income of the 2.4 million tax filers who make $100,000 or less, according to the state’s income data. Currently, however, the highest earners don’t pay the highest taxes — at least not as a share of their income.

According to the state’s latest tax profile report in 2024, those earning $200,000 or more account for 45% of all the income earned in the state. But they only pay 37% of the taxes.

On the corporate tax side, around 95% of businesses would get a tax cut, the income data shows. Roughly 3,000 companies would see their taxes go up, the vast majority of which are national firms that make most of their money outside the state.

What Amendment 87 would mean for the state budget

Amendment 87 asks voters for permission to raise taxes by up to $2.7 billion a year on the high end. However, legislative analysts project it would only generate around $2 billion for next year’s budget. (Under state law, the maximum estimate is presented to voters to avoid repeat elections if tax collections exceed expectations.)

A $2 billion tax increase would be the equivalent of growing the state’s $17 billion general fund by 11% — but the money can’t be spent on just anything. Amendment 87 only allows those dollars to be used for K-12 education, pre-K, healthcare and childcare.

Still, don’t count on a major expansion of those programs if Amendment 87 is approved.

Because of the state’s budget crunch, most of that money would likely be needed to prevent future budget cuts.

For the 2027-28 budget, the money generated by Amendment 87 would be enough to cover the state’s projected $1.6 billion budget deficit, with $400 million leftover. The majority of that shortfall — and the ongoing deficits the state has faced in recent years — has been caused by the rapid rise of Medicaid costs.

According to the governor’s budget office, Medicaid spending has grown by 13.6% a year since 2023, almost twice the annual rate of the state budget as a whole. Healthcare costs are also rising faster than the state is allowed to spend under TABOR, which limits state revenue to the combined rate of population and inflation.

Long-term, the budget outlook under Amendment 87 is less certain. If Medicaid costs continue to rise unabated, the money generated by Amendment 87 might not be enough to prevent budget problems from resurfacing, especially if lawmakers try to expand other programs in the meantime.

In recent years, those financial pressures have complicated the legislature’s efforts to update Colorado’s school funding formula for the first time since 1994. The state’s budget woes have also stymied efforts to sustain Colorado’s crumbling childcare system.

But, if Medicaid costs stop rising as quickly — or a future Congress reverses the federal government’s plans to shift more money onto states — Amendment 87 could lead to major new investments in public schools and childcare.

Who is supporting Amendment 87 and why

Amendment 87 was put on the ballot by a coalition of liberal advocacy groups, including progressive think tanks like the Bell Policy Center, the Colorado Fiscal Institute and the Colorado Center on Law and Policy. It’s also backed by public school advocates, environmentalists, healthcare policy groups and the state workers union.

Supporters see Amendment 87 as a way to address the state’s ongoing $1 billion budget deficits, while also cutting taxes for working class families who struggle to afford the state’s high cost of living. 

“We have two crises happening — one of which is the state budget crisis, but the other one is the affordability crisis,” said Chris deGruy Kennedy, the campaign co-chair, who also leads the Bell Policy Center. “We really felt we needed a solution that was responsive to both of those.”

Supporters also see it as a way to alleviate income inequality and require the wealthy to contribute their fair share in taxes.

Protect Colorado’s Future, the main committee supporting Amendment 87, has raised $691,000, much of which has been in-kind donations from liberal nonprofits using staff time to support the campaign.

The Bell Policy Center donated $130,000 to the campaign. Other top contributors include the Colorado Statewide Parent Coalition, which has given $88,122.75, Great Education Colorado, which has contributed $82,427.84, and the Colorado Fiscal Institute, which has contributed $77,838.43. The state employees union, Colorado WINS, has given $50,000.

Another committee, Yes on Colorado Kids, which was formed in support of Proposition NN, has also registered in support of Amendment 87. It had raised more than $2 million in campaign donations as of Sept. 16, most of it from two groups.

Gary Advocacy LLC, a political nonprofit tied to Gary Community Ventures, a charitable foundation that promotes education and childcare initiatives, gave $1 million, while the Colorado Education Association’s campaign fund, Colorado Fund for Children and Public Education, contributed $950,000.

Who is opposing Amendment 87 and why

Conservatives and business groups have launched a number of campaigns to fight Amendment 87, arguing that the measure’s tax increases will harm the state’s economy and eliminate jobs.

“Coloradans cannot afford a nearly $3 billion tax hike,” Michael Smith, the state director of the National Federation of Independent Business, said in a statement. “Colorado is already one of the most expensive states in the country.”

Critics also argue it could lead some of the state’s highest earners to leave Colorado entirely, taking their tax dollars with them.

“When taxes go up, big businesses leave and take their good-paying jobs with them,” Smith said. “Those that stay behind, our family farms and small businesses, face tough choices, like cutting jobs, slashing wages, or raising their prices on consumers.”

Opponents have also criticized the measure for how its tax brackets were set up.

While the federal government has different brackets for single and joint filers, Amendment 87 would tax individuals and dual-income households at the same rate. Critics say that amounts to a marriage penalty, because a married couple making $600,000 that file jointly would pay a higher state tax rate than two single filers in the same household making $300,000.

The proposed tax brackets also don’t adjust for inflation. That means people making $450,000 in today’s dollars would be moved into a higher tax bracket within eight years at 3% inflation. The measure’s tax cuts would also lose value over time.

However, it would take a while for most taxpayers to reach the $500,000 threshold where the higher tax brackets kick in. At 3% inflation, it would take someone making $100,000 annually more than 50 years to move into the higher bracket.

In response to Amendment 87, conservatives are backing a separate ballot measure, Proposition 136, which would limit state income taxes to the current rate of 4.4%. But to have any effect, both measures would have to pass, and Proposition 136 would need to get more votes.

Proposition 136 was placed on the ballot by Advance Colorado, a political nonprofit that backs conservative causes, and it has drawn support from business groups like the Colorado Chamber of Commerce and conservative activists that oppose higher taxes.

You can read more about Proposition 136 in our voter’s guide entry here.

One committee opposing Amendment 87 and supporting Proposition 136, Brighter Colorado, had raised more than $306,000 as of Sept. 16.

Brighter Colorado is also supporting a number of other conservative ballot measures and opposing another backed by Democrats — Proposition NN, which would eliminate some taxpayer refunds in order to increase funding for K-12 education.

The majority of the campaign’s funding so far has come from conservative political nonprofits: Common Sense America and Advance Colorado. The Colorado Sun considers both of them dark money groups because they don’t disclose their donors.

The Americans For Prosperity Colorado Issue Committee had raised $49,000 in opposition to the measure, while Your Family’s Future Alliance, a conservative committee opposing Amendment 87 and Proposition NN, had raised $15,000.

Affordable Colorado, Let’s Go Colorado, Keep Colorado Affordable, and Don’t Price Us Out have also been registered in opposition to the measure, but have not reported any contributions to date.

It’s not just Republicans that oppose the measure. Gov. Jared Polis — a Democratic tech billionaire who has long broken with his party on tax policy — said the proposal would be “absolutely devastating” to the state’s economy.

How Amendment 87 appears on the ballot

Read the nonpartisan state ballot guide analysis of the measure here.

Type of Story: News

Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.